EU downstream coils market optimistic on positive automotive demand

Sources reported positive signs from the automotive sector June 15, and downstream coil prices fell further on scarce transactional activity.

General demand for downstream coils remained muted June 15 as buyers refrained from restocking against high inventories and pricing downtrends.

For cold-rolled coil, Northern European prices fell Eur25 on the day to Eur1020/mt ex-works Ruhr. Italian CRC followed the slide, assessed down Eur65 on the week at Eur960/mt ex-works Italy.

Galvanized material also moved lower across Europe on muted demand, assessed in Northern Europe at Eur1,075/mt ex-works Ruhr, down Eur45 on the week. In the Southern market, HDG fell Eur50 to Eur1,000/mt from Eur1,050/mt ex-works.

Despite little transactional activity heard in the wait-and-see market, sentiment was more optimistic given signs of recovery from the automotive sector. A trader source reported semi-conductor supply chain issues were largely resolved, but emphasized that positive demand from OEMs had to be regarded on a case-by-case basis. The source heard one large automotive company was approaching factories directly, increasing production levels to near-full capacity.

A mill source agreed that indications could not be taken for granted.

“There are mixed messages in the market, but on our end automotive is looking absolutely positive,” the mill source said. “The sector hasn’t been as reliable as we would like in previous years, but the signs of recovery are there, demand for forward volumes is looking good – though negotiations are still ongoing.”

The same source reported production capacities were sufficient for current demand due to planned maintenance and improvement projects postponed from 2021. Downstream coil prices were heard to be particularly sensitive to automotive demand, making the return of the sector the key to market stability.

General stockholder demand had all but collapsed given high stock levels in the market due to panic buying and logistical delays in receiving import material, a trader said. The source had not received inquiries for imported downstream material for some time, with apparent demand expected to decrease even further into the traditionally quieter summer period.

— Benjamin Steven, Maria Tanatar